While many people choose to sell their homes at auction as opposed to private sale, the fact that auction clearance rates rarely reach one hundred per cent for any given period indicates that not all auctions end with a sale.
Auctions can be a very successful way to achieve an excellent price for your property. With all the people who have shown an interest in purchasing together in one environment, along with psychology and egos, very quickly the amounts being bid can shoot upwards.
But in the cases where the auction is unsuccessful, it is usually the price of the property that is the reason. Although most of us have a value we believe our home or investment property to be worth and it is very difficult to be forced to accept a price we believe to be undervalued, ultimately the 'market' (those bidders standing at your auction) will be willing to pay a certain amount which you can either choose to accept or reject.
Having a realistic understanding of the value of your property is of huge importance as you go into the auction process. As a real estate professional, it is up to your agent to discuss with you, frankly and honestly, the state of the market and a fair amount you could expect to receive for your property.
Many agents will try to win your business by overestimating, assuring you that they can reach a particular figure come auction. In reality, only the buyers who are bidding can determine what price your property will achieve.
When armed with a good understanding of the approximate market value of your home you will be much better prepared to approach an auction and it won't be such a shock if a lower than expected, but within market range, value eventuates.
Of course, it is ultimately up to you whether you accept this price or not (if it is below reserve price). However you may want to consider the consequences of not selling on auction day before you allow your property to be passed-in.
Property advertising is not cheap, and any further monies spent on promotion will eat away at the value achieved, which is not guaranteed to be greater if you keep your home on the market. It is also not a desirable situation to have a property on the market for an extended period of time as people may start to wonder why it has not sold and if in fact there is something wrong with it.
Ultimately, a good approach to auction is for the seller to be prepared regarding the realistic value of their property and the current state of the market. This will enable you to make a measured judgment about whether or not you should accept an offer made on the day, or if you should withdraw your home from the market and try again at a later date.